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What is a lease and who needs one?
  • A lease is an agreement for a contractual relationship in which the use of equipment is granted for compensation for a specified period of time.
  • A lease is required whenever a carrier performs transportation of property in equipment it doesn’t own.
  • A lease agreement should not be entered into without a full understanding of all of the terms.

A lease agreement is a contractual relationship in which the use of equipment is granted for compensation by the owner to an authorized carrier for use in regulated transportation of property for a specified period of time.

With few exceptions, the regulations require a lease whenever a carrier performs transportation of property in equipment it doesn’t own. A lease is simply another term for an agreement used when renting or using property that doesn’t belong to you.

As a holdover from the Interstate Commerce Commission (ICC), the leasing regulations are notoriously difficult to read.

Lease agreements should not be entered into without a full understanding of all of the terms. Verbiage like “it’s just a standard lease” should be avoided. The agreements convey certain rights, but certain items may work against either party as well. If not clear how a particular expense or compensation is handled, it can be added to the lease. A lease agreement that is not understood can open a “rabbit’s hole” when things do not go as planned. If unsure of what the terms and conditions entail, obtain professional legal assistance — in advance of signing.

Further compliance with the FMCSRs requires you, as the acquiring carrier, to:

  • Mark the vehicle being leased with your company’s legal name (as shown on the MCS-150) and USDOT number before operating on public highways.
  • Create a driver qualification file on the driver,
  • Add the driver to the company’s alcohol and drug testing program (if applicable), and
  • Comply with hours of service, including the ELD (electronic logging device) mandate.